Confidence among British businesses has plummeted to the lowest levels since ex-prime minister Liz Truss’s mini-budget in September 2022, following the autumn budget’s large tax increases.
A survey of nearly 5,000 firms from the British Chambers of Commerce showed concerns over taxation were at their highest since 2017, while confidence about sales over the next 12 months was the lowest since late 2022.
The BCC’s director general, Shevaun Haviland, said: "The worrying reverberations of the budget are clear to see in our survey data. Businesses confidence has slumped in a pressure cooker of rising costs and taxes."
The chancellor, Rachel Reeves, announced £40bn of tax rises on 30 October, with a big burden on businesses, who will have to pay higher social security charges from April, along with a higher national minimum wage.
While the Bank of England estimates that higher public spending will temporarily boost growth next year, the tax rises are also expected to push up inflation slightly. The BCC said 55% of firms plan to raise prices, up from 39% the quarter before, while 24% intend to scale back investment, up from 18% previously.Growth in the UK economy picked up in the first half of 2024 as it recovered from a shallow recession in late 2023, but flatlined in the third quarter.
The Bank of England has forecast zero growth for the fourth quarter, and an expansion of 1.5% in 2025.
In China, services growth has risen to a seven-month peak, according to a closely watched survey.The Caixin purchasing managers’ index (PMI) rose to 52.2 in December from 51.5 in November, signalling the strongest growth in the service sector since May, as new orders accelerated, despite a fresh fall in exports. Confidence remained upbeat despite higher cost pressures.
However, authorities are struggling to prop up the yuan, which has fallen to a 16-year low amid concerns about the economy.
Chinese stocks slipped on Monday, with the benchmark CSI 300 index down by 0.16%, as the country’s two biggest stock exchanges said they met foreign investors over the weekend.
The South Korean Kospi led gains in Asia, rising by 2.3%, despite political turmoil in the country. Police will consider arresting members of the presidential security service if they try to block investigators, in an attempt to execute an arrest warrant for impeached president Yoon Suk Yeol, according to the Yonhap news agency and Reuters.
The Agenda
• 9am GMT: Eurozone HCOB PMI composite and services final for December
• 1pm GMT: Germany inflation for December
• 2.45pm GMT: US S&P Global composite and services PMIs final for December
• 3pm GMT: US factory orders for November
We'll be tracking all the main events throughout the day … |
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